Company Law – Offer and
With regards to
the situation that Neil has been placed in, it is necessary to consider the law
related to offer and acceptance. Contractual agreement
has traditionally been analyzed in terms of offer and acceptance. One party,
the offeror, makes an offer which once accepted by another party, the offeree,
creates a binding contract (E-lawresources, 2017).
In order to reached to an offer,
it must be shown that the offeror had the intention to be bound (Harvey v
Facey, 1839). Thus, Neil offered to sell his car to James for £5000 (Offer 1)
shows his intention to be bound in this agreement. In this statement, it is
clearly that Neil is the offeror and James is the offeree, and what must be
determined, is whether Neil’s offer 1 has been accepted. It is unlikely that an
acceptance appeared because the statement made by James “I will buy it if I can
raise the money” is considered as a consideration.
Elements of a
contract included offer, acceptance, and consideration (Nelegalaidfarm, 2013).
Consideration is when a person A makes a promise, person B makes promise in
return. Neil’s consideration is to keep the car for James until Saturday (7th
June) and James’s
consideration is that he will buy it if he can raise the money. In Currie v
Misa (1875), Lush J referred to consideration as containing of a disadvantage
to the promise or a benefit to the promisor. However, that is not the focus
point in this case. Since the statement is most likely to be treated as
consideration, there is no acceptance between Neil and James. Neil does require
James to give him a notice in writing, so before Neil receiving the notice
(writing form), there is no acceptance yet between Neil and James. Acceptance is generally not effective until it
communicated to the offeror (Entorres v Miles Far
is an issue arises which Neil has revoked his offer as advertised the sale of
the car in the local newspaper without notifying James. Although Neil is not in
obligation to keep his offer until Saturday (7th
June) (Routledge v Grant, 1828), but the general rule of revocation is that the
revocation of an offer must be communicated to the offeree and that is not
effective until this has been done (Media, 2014). Thus, it is most likely to
consider Neil’s action as a “breach” of contract. It occurred when one party
failed to fulfil his duties or commitment. Neil failed to keep his promise with
James in keeping the car for him until Saturday (7th June). However,
with the law only related to offer and acceptance, Routledge v Grant (1828)
defendant that the offeror can revoke his offer at any time before acceptance.
There is no acceptance yet thus Neil is not in obligation to keep his offer for
James, he is no wrong in this statement.
On the other hand,
when Neil put the advertisement the in the local newspaper which means he opens
a new offer to a class of persons (who has seen the newspaper) (Offer 2). Carlil
v Carbolic Smoke Ball Company Co (1893) has defined that offer does not have to
be made to a particular person, it may be made to a class of persons or to a
world at large. They also stated that an advertisement may be considering as an
offer. However, in this instant, the advertisement was most likely to be
treated as an invitation to treat (Patridge v Crittenden). An invitation to
treat can be defined as an indication that a person is prepared to receive offers
with a view to entering into a binding contract (Media, 2014). Thus, when Neil
offer to sell his car in 5000 in local newspaper, it is he in making the offer
and Oliver who saw the advertisement shows acceptance to Neil’s offer, but he
required for tax and MOT (a test of safety and exhaust emissions of motor
vehicles of more than specific age) for 12 months. It may be considered as a
counter-offer. According to Media (2014), a counter-offer does not create
acceptance, it is making a new offer which may in turn to be accepted or
rejected. Neil rejected the counter-offer, so it is no longer available for
acceptance. Instead, Neil has made a new offer for Oliver which he changes the
price from £5000 to £4800 but he is not going to tax and MOT the car (Offer 3).
However, for the offer 3, there is no acceptance for it as well since the
statement which made by Oliver “I will think about it” is vague and unsure.
must be determined from now, is who are the one accepted the offer. On Friday
Morning (6th June), James have raised the £5000 for the car and he
is going to accepts the offer 1, but the note that he left for Neil’s daughter
Katie has lost for some reasons. Neil never saw the note. In this case, it is
unlikely that the acceptance appeared because communication of acceptance only
occurred when James’s acceptance must be authorised by Neil (Entorres v Miles
Far East, 1995). However, it is quite ambiguous in this statement since James
even post a confirmation letter to Neil for his acceptance, where it is
necessary to consider postal rule applied, but James has incorrectly addressed
the letter. Postal rule was communication through host that anticipated by the parties,
the postal rule is complete and effective as soon as a letter is posted (Adams
v Lindsell, 1818). However, Allaboutlaw (2017) argued that the postal rule does
not apply when the letter has not been posted properly (addressed correctly).
Thus, the postal rule has failed to apply in this statement.
On the same day,
Oliver went to Neil’s house with £4800 in cash to accept the offer 3, and Neil
accepted on the spot. Thus, the contract gets concluded as soon as the car is
being sold to Oliver. It is Neil making the offer 3 (£4800 with no tax and MOT
the car) and Oliver accepting the offer 3. Neil immediately wrote to James
withdrawing his offer. The revocation is effective because the postal rule
applied (Adams v Lindsell, 1818), James has received Neil’s letter (Saturday, 7th
June) before his confirmation letter reached out to Neil (Monday, 9th
June). Therefore, when the letter is received on Saturday (7th
June), the offer failed, and James’s acceptance is ineffective in this
statement. It is unlikely that the contract was concluded between Neil and James.
conclusion, there are three offers and one counter-offer which occurred in this
case study, to make it clearly, it concluded:
Offer 1: Neil offered to sell his car
to James for £5000.
Offer 2: Neil posted an advertisement
for sale of car in local paper (invitation to treat).
Counter-offer: Oliver who saw the
advertisement accept the offer 2 but required tax and MOT the car for 12
Offer 3: Neil rejected the
counter-offer and make a new offer with the price of £4800 and no tax and MOT
for the car.
There is no acceptance until the
contract concluded with Neil and Oliver (Offer 3). The contract between Neil
and James is invalid from where the postal rule failed to apply because James
has incorrectly addressed the letter, Neil never saw any note/letter that
regarding to his acceptance. However, Neil’s revocation letter to James is
effective with the postal rule applied, Neil’s letter reached out to James before
James’s, and thus, the offer 1 failed when James received the letter.
should notice James when he was going to post an advertisement about the sale
of car to avoid the “breach” of contract. However, with the law related only to
offer and acceptance, there is no wrong to Neil because Routledge v Grant
defended that the offeror could revoke his offer at any time before acceptance.